As negotiations between the WGA and the studios draw near, the drumbeat for a writers strike intensifies. As part of the union’s preparations for tough bargaining with the producers and a potential walkout, leaders of the WGA East and WGA West last week sent a letter to members, outlining top battleground issues including improving the union’s ailing health fund, getting paid family leave, raising compensation in new media, closing the pay gap between basic cable and broadcast, and loosening exclusivity clauses.

In the letter, union leaders painted a gloomy economic picture of corporate greed and worker exploitation to bolster support for their contract demands, claiming that while the operating profits of the six major media conglomerates have doubled to $49 billion in the past decade, the average incomes of their members “in both features and series TV have actually decreased over that same decade.”

As it turns out, that’s only half true. The WGA West’s annual reports show that while the average earnings of screenwriters have indeed declined steadily over the last 10 years, the average earnings of television writers have actually increased significantly during the same time frame, even adjusting for inflation.

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The guild’s records show that in 2015, the last year for which data is available (read the annual report here), 4,129 TV writers earned $803 million under the WGA West’s basic contract, for an average annual income of $194,478. Compare that to 10 years ago (read that report here), when 3,335 TV writers earned $454 million – for an average annual salary of $136,132 – and it’s clear that guild leaders are blowing smoke. A guild spokesman declined comment.

On average, TV writers made $48,936 more a year in 2015 than they did in 2006 – a 33.6% increase. Even adjusting for inflation, which comes to about 17% since 2006, they still took home some $40,000 more in real purchasing power than they did in 2006.

Even so, and despite a rapidly expanding marketplace for American TV shows, many TV writers are feeling pinched by shorter orders on episodic series. That’s especially hard for writing teams, which afford producers two writers for the price of one.

There’s no doubt, however, that guild leaders are right about the plight of Hollywood’s film writers, who have seen their wages steadily erode over the past two decades. According to the WGA West reports, they earned less in 2015 ($362.1 million) than they did in 1996 ($364.4 million) – and that’s in real dollars. Adjusted for inflation, they collectively earned about a third less in 2015 than they did in 1996.

That decline is reflected in their average annual earnings, as well. In 2005, there were 1,940 screenwriters who collectively earned $453.9 million under the WGA West’s contract – averaging $233,969, or $32,691 more than they’d average 10 years later.

Today, earnings from television are more than double those from film, but it wasn’t always so. For decades, writers’ earnings from film were always higher than those from television, but that changed in 1999. And it’s been the case every year since, except for the strike year of 2007, when producers scrambled to get their writers to turn in completed scripts and rewrites before the widely anticipated work stoppage over new media revenues. That strike year, ironically, saw a record $525.4 million in writers’ film earnings, and according to the guild, “Much of the increased work appears to be related to accelerated employment prior to the strike.”

Writers Guild Annual 'Beyond Words' panel event, Los Angeles, America - 04 Feb 2016
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The WGA is expected to begin negotiations for a new film and TV contract next month, and it remains to be seen whether strike fears will lead to the kind of “accelerated employment” that took place prior to the 100-day strike of 2007-2008.

If not, screenwriters’ earnings are expected to continue their slide, mostly because the major studios are turning out fewer films every year. The number of films rated by the MPAA’s Classification and Rating Administration have been in a steep decline in recent years. In 2006, there were 853 films rated, rising to 897 in 2008. Since then, however, the trend has been steadily downward, falling to just 613 in 2015 – or 285 fewer than in 2008. The same general trend can be seen in the number of films released each year by MPAA-member companies. In 2006, they released 296 films, and it’s been downhill ever since. In 2015, they released just 167 films – almost 45% fewer than in 2006.

Even so, writers’ “total earnings,” as the guild refers to all earnings other than residuals, have topped $1 billion in each of the last five years, and in 2015 exceeded those in 2010 by $187 million – an increase of nearly 19%.

Residuals, meanwhile, have been booming, increasing every year since 2009, giving WGA West members an additional $400 million in 2015 alone, bringing their true total earnings that year to over $1.5 billion. Most of the boom, however, has been in television and new media. TV residuals have increased 50% since 2010, and new media residuals by a whopping 896%. In 2015, new media residuals totaled $25.4 million, topping primetime network residuals by $6 million.

In some years, residuals account for a third of writers’ gross take-home pay, and in others, about a quarter, with residuals from TV shows continuing to outpace residuals from feature films. In 2015, TV residuals totaled $261.7 million, which was $123 million more than film residuals. And that year, screenwriters received $4 million less in residuals than they did in 2010.

If screenwriters’ earnings continue to plunge, the surest way to help stabilize their incomes would be to adjust the contract’s residuals formulae to give them a larger share of the reuse pie, but that would probably require some trade-offs.

WGA East's Michael Winship, left, and WGA West's Howard Rodman
WGA East’s Michael Winship, left, and WGA West’s Howard Rodman
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One issue that’s certain to be a major bargaining issue next month is the dire condition of the WGA’s Health Fund. Widely considered to be the best – if not the best run – in the industry, the fund “has run deficits for all but one of the last four years, forcing a dip into long-untouched reserves,” guild leaders wrote in a letter to their members recently. This downturn, they said, is “due to rapid inflation in health care costs nationwide.” The letter was signed by WGA West president Howard Rodman, WGA East president Michael Winship, by the vice presidents and secretary-treasurers of both unions, and by the guild’s entire negotiating committee.

The WGA East doesn’t make its members’ earnings publicly available, and declined to do so when asked. The East gets only a fraction of the TV work, but the two guilds share the same sickly health plan. “As we approach negotiations for a 2017 Minimum Basic Agreement,” WGA East executive director Lowell Peterson reported to the guild’s council last May, “two things have become clear:

  1. The Producer-Writers Guild Health Fund’s expenditures are rising far more quickly than employer contributions, so we now face large operating deficits.
  2. The producers are making money hand over fist. $47 billion in television profits in 2014. Feature film box office receipts reached record levels in 2015 – more than $11 billion in the U.S. and Canada alone, with China and other overseas markets expanding even more rapidly.”

These two things taken together, he wrote, “suggest that we should insist on significantly increased employer contributions to the health fund during MBA negotiations next year. I think it is a safe bet that the AMPTP (the companies’ collective bargaining association) anticipates exactly that. But of course winning significant amounts at the bargaining table requires members to make real commitments to action away from the table. And we can anticipate that the companies will insist, as a condition of paying more, that the union trustees – appointed by the WGA East and by the WGA West – agree to cuts in benefits at the same time.”

The Health Fund’s latest financial statement for 2015 notes it paid out more than $130 million in claims that year, and that its net assets had fallen nearly $25 million from the beginning of the year to the end – from $196.3 million to $171.5 million. Currently, employers contribute 9% of covered earnings to fund the health plan, but barring drastic cuts, they’ll have to pay more to save it. And therein could lie the spark for a strike, because one sure way to get members riled up is for management to insist on rollbacks, especially from a union that considers itself under siege, whether it is or not.

In a communique with their members, the guild leaders also asked for their input on numerous other contract demands, including:

  • Increase minimum compensation in all areas
  • Increase residuals for undercompensated reuse markets
  • Expand types of made-for New Media programs subject to MBA minimums
  • Increase contributions to Pension Plan
  • Strengthen economic and workplace protections for television and new media writers employed and compensated on per episode basis
  • Strengthen regulation of options and exclusivity provisions in television and new media employment contracts
  • Address inequities in compensation of writing teams employed under term deals for television and new media series
  • Provide paid family leave for writers employed under term deals for television and new media series
  • Amend definition of a professional writer to include writing for new media
  • Increase funding for Showrunner Training Program and Tri-Guild Audit Program
  • Modify and expand all arbitrator panels
  • Modify requirements for work lists and other information submitted by companies

Few, if any, of those proposals, however, are likely to be strike issues, and the guild, as is the custom with pattern bargaining, is expected to be offered the same big boost in new media residuals the DGA recently received, but it will no doubt take some horse-trading to get it.

Comcast To Announce Third Quarter 2016 Earnings, Philadelphia, USA - 18 Oct 2015
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As for the guild leaders’ claim that the six major companies – Comcast, Disney, 21st Century Fox, Time Warner, CBS Corp and Viacom – had operating profits of $49 billion? That’s actually true, but closer to $50 billion, according to SEC filings. But their collective operating profits are only up 79% from 2006, not the 100% that the guilds claim. And comparing the six media conglomerates to what they were a decade ago is also misleading. Ten years ago, for instance, Comcast was just a cable operator that didn’t own NBCUniversal, Bravo or the USA Network. Disney hadn’t yet bought Marvel Entertainment, and its operating profits include revenues from Disneyland, Disney Cruises and a whole host of ancillary businesses that don’t have anything to do with writers. And 10 years ago, Time Warner was still saddled with AOL – widely considered one of the worst mergers of all time – which it has since spun off, and Fox was News Corp, which included newspapers like the New York Post, which has since been spun off and didn’t have anything to do with the WGA or its members either.

The guild’s view of the industry’s massive profitability also doesn’t appear to have taken into account Paramount Pictures’ downturn or Sony Pictures’ $1 billion write-down last month on its movie operations.

The $49 billion “operating profits” figure cited by guild leaders isn’t really a true reflection of how well the companies are performing, either. Growing operating profits may simply mean that a company has gotten bigger — the way Comcast did when it bought NBCUniversal. Operating profits also don’t include big expenses such as debt payments and taxes, so in theory, a company could keep making deals that increase its operating profit line until it goes bankrupt.

A truer gauge of a company’s financial performance is its operating margin – a comparison of a company’s operating income to its revenues, which would also grow with acquisitions. And here the six major conglomerates, as a group, are also showing improvement – to a 23% margin from 18% 10 years ago, but nothing like the doubling of operating profits cited by guild leaders.

Individually, the biggest margin gains over the past decade are at Disney – to 26% from 19%, mostly reflecting growth at ESPN; at Fox – to 22% from 15% due to the strength of Fox News and getting rid of low-margin newspapers; and Time Warner – to 28% from 17% by getting rid of AOL and Time Inc.

Viacom
Associated Press

Viacom, on the other hand, has seen its operating margin drop to 20% from 24% due to sagging ratings at Nickelodeon and the near collapse of Paramount. CBS, which released its quarterly earnings Wednesday, saw a small drop in 20015 to 17% from 18% a decade ago.

Some WGA West leaders have been talking up the threat of a strike – if not a strike itself – since the guild’s officer and board elections in September 2015. David Goodman, who would go on to be elected vice president, urged members not to forget “how important the threat of a strike is in negotiations.”

And Aaron Mendelsohn, who was elected secretary-treasurer, told members that he believes in taking a “strong and pragmatic approach that utilizes the strike vote judiciously and only under certain circumstances, like when our sacred cows are threatened (health and pension, residuals, etc.), or if we need to stake a fair claim in a new delivery system or work area, or if rollbacks remain on the table.”

And Patric Verrone, who as president led the guild’s last strike, reminded members during his 2015 campaign for reelection to the board that “Leverage in collective bargaining is most effectively built through the careful development of a viable strike threat.”